Article I of the U.S. Constitution grants Congress the power to appropriate funds from the Treasury, pay the
obligations of and raise revenue for the federal government, and publish statements and accounts of all financial

By law, Congress is also obligated to write a budget representing its plan to carry out these transactions in the
forthcoming fiscal years. While the President is required to propose his administration’s budget requests for
Congress’s consideration, Congress alone is responsible for writing the laws that raise revenues, appropriate
funds, and prioritize taxpayer dollars within an overall federal budget.

The budget resolution is the only legislative vehicle that views government comprehensively. It provides the
framework for the consideration of other legislation. Ultimately, a budget is much more than a series of
numbers. It also serves as an expression of Congress’s principles, vision and philosophy of governing.

This Budget Resolution for Fiscal Year 2012 intends to recommit the nation fully to the timeless principles of
American government enshrined in the U.S. Constitution – liberty, limited government, and equality under the
rule of law. It seeks to guide policies by those principles, freeing the nation from the crushing burden of debt that
is now threatening its future.

This budget is submitted, as prescribed by law, to apply these principles, reflect this vision, and provide a
framework for the orderly execution of Congress’s constitutional duties for Fiscal Year 2012 and beyond.

House Budget Committee | April 5, 2011


This budget helps spur job creation today. Improves incentives for growth.This plan puts the budget on the path to balance and the economy on the path to prosperity. Ensures that the next generation inherits a stronger. increasing real GDP by $1. PATIENT-CENTERED HEALTH CARE: Repeals and defunds the President’s health care law. Prevents the $1.5 million additional private-sector jobs in the last year of the decade. House Republicans will lead.8 trillion relative to the current-policy baseline. more prosperous America.5 trillion tax increase called for in the President’s budget. businesses and families. REAL SECURITY: Fulfills the mission of health and retirement security for all Americans by making the tough decisions necessary to save critical health and retirement programs. Puts the budget on the path to balance and pays off the debt. in which spending never falls below 23 percent of GDP over the next decade. and curbs corporate welfare bringing non-security discretionary spending to below 2008 levels. brings the unemployment rate down to 4 percent by 2015. RESTORING AMERICA’S EXCEPTIONAL PROMISE: Tackles the existential threat posed by rapidly growing government and debt. GROWTH AND JOBS Creates nearly 1 million new private-sector jobs next year. and investment. reflects the ban on earmarks. Brings government spending to below 20 percent of the economy. Locks in spending cuts with spending controls. yielding $1. SPENDING CUTS AND CONTROLS: Stops Washington from spending money it does not have on government programs that do not work. House Budget Committee | April 5. and $5. SUMMARY OF THE FISCAL YEAR 2012 BUDGET RESOLUTION Where the President has failed.2 trillion in government spending over the next decade compared to the President’s budget. Spurs economic growth. Lowers tax rates for individuals. applying the nation’s timeless principles to this generation’s greatest challenge. savings.000 per year in higher income for each family. TAXES Keeps taxes low so the economy can grow. a sharp contrast to the President’s budget. stops spending money the government doesn’t have. Calls for a simpler. Surpasses the President’s low benchmark of sustainability – which his own budget fails to meet – by reaching primary balance in 2015. Eliminates roughly $800 billion in tax increases imposed by the President’s health care law. Unleashes prosperity and economic security. KEY OBJECTIVES ECONOMIC GROWTH AND JOB CREATION: Fosters a better environment for private-sector job creation by lifting debt-fueled uncertainty and advancing pro-growth tax reforms. Eliminates hundreds of duplicative programs. and results in 2. KEY FACTS SPENDING Cuts $6. advancing instead common-sense solutions focused on lowering costs. expanding access and protecting the doctor-patient relationship. DEBT AND DEFICITS Reduces deficits by $4. Sets top rates for individuals and businesses at 25 percent.1 trillion in higher wages and an average $1. 2011 4 . and lifts the crushing burden of debt.5 trillion over the decade. less burdensome tax code for households and small businesses.4 trillion compared to the President’s budget over the next decade.

brings the top rate from 35 to 25 percent to promote growth and job creation. House Budget Committee | April 5. Ending Corporate Welfare: Ends the taxpayer bailouts of failed financial institutions. create jobs. Repeals the new health care law and moves toward patient-centered reform. Strengthening the Social Safety Net Repairing a Broken Medicaid System: Ends an onerous. which is the highest in the industrialized world. and stops Washington from picking the winners and losers across sectors of the economy. Corporate Tax Reform: Improves incentives for job creators to work. Effective and Responsible Government Prioritizing National Security: Reflects $178 billion in savings identified by Defense Secretary Robert Gates. Reduces the bureaucracy’s reach by applying private-sector realities to the federal government’s civilian workforce. Advancing Social Security Solutions: Forces action by the President and both chambers of Congress to ensure the solvency of this critical program. KEY COMPONENTS Efficient. one-size-fits-all approach by converting the federal share of Medicaid spending into a block grant that gives states the flexibility to tailor their Medicaid programs to the specific needs of their residents. Targets hundreds of government programs that have outlived their usefulness. Boosting American Energy Resources: Removes barriers to safe. Streamlining Other Government Agencies: Returns non-security discretionary spending to below 2008 levels. and innovate in the United States by lowering the corporate tax rate from 35 percent. invest. responsible energy exploration in the United States. Changing Washington’s Culture of Spending: Locks in savings with enforceable spending caps and budget- process reforms. Fulfilling the Mission of Health and Retirement Security Saving Medicare: Protects those in and near retirement from any disruptions and offers future beneficiaries the same kind of health-care options now enjoyed by members of Congress. reinvesting $100 billion in higher military priorities and dedicating the rest to deficit reduction. lowering rates and clearing out the burdensome tangle of loopholes that distort economic activity. 2011 5 . accountable career scholarships aimed at empowering American workers to compete in the global economy. unlocks American energy production to help lower costs. but also how tax dollars are spent. to a more competitive 25 percent. addressing not only what Washington spends. Promoting Economic Growth and Job Creation Individual Tax Reform: Simplifies the broken tax code. Preparing the Workforce for a 21st Century Economy: Consolidates the complex maze of dozens of overlapping job-training programs into more accessible. and reduce dependence on foreign fossil fuels. reforms Fannie Mae and Freddie Mac.

creates nearly 1 million new debt and government spending – private-sector jobs next year. Commits to 15 percent of GDP in 2050 the explosive growth of government Deficit Brings deficits under $1 trillion in $1. Pays off the debt next decade. pre- bailout levels Taxes Stops all of President’s taxes.7 trillion relative Adds $9. health care law.1 trillion to the debt over the to the President’s budget.8 trillion in above CBO’s current-policy spending cuts relative to CBO’s baseline current-policy baseline Spending Levels Brings non-security discretionary Locks in reckless spending spree spending to below pre-stimulus. A CONTRAST IN BUDGETS The Path to Prosperity President’s FY2012 Budget Spending Cuts $6. drops below 23 percent. Accelerates a debt-fueled over time economic crisis Health Care Repeals the job-destroying health care law Accelerates the job-destroying health care law Jobs According to the Heritage Center for Accelerates tax hikes. Puts the the $1 trillion mark budget on a path to balance Primary Balance Primary balance (spending – interest Never reaches primary balance – payments = revenue) is reached in 2015 failing to clear even the low bar the administration set for itself Debt Held by Public Reduces the debt by $4. 2011 6 .2 trillion deficit in FY2012 marks FY2012. Reforms Imposes a $1. Data Analysis. global competitiveness driving jobs overseas Size of Government Brings government down to below 20 Spending as a percent of GDP never percent of GDP by 2015.4 trillion the fourth straight deficit exceeding relative to President’s budget. Reduces deficits $4. Brings policies that result in slower unemployment rate down to 4 percent in economic growth and fewer American 2015 jobs House Budget Committee | April 5.5 trillion tax the broken tax code increase Corporate Tax Lowers the corporate tax rate to 25 Leaves in place the highest corporate percent to promote job creation and tax rate in the developed world.2 trillion in spending cuts relative $400 billion in new spending to President’s budget. $5.

2011 7 .House Budget Committee | April 5.

CHOICE OF TWO FUTURES House Budget Committee | April 5. 2011 8 .

This budget resolution reflects that choice. For too long. This did not sit well with the American people. This crisis squandered the nation’s savings and crippled its economy. yet failed to deliver on its promises to create jobs. And a government that promotes dependency and undermines the institutions of faith and family will inevitably weaken the nation’s greatest strength: the exceptional character of its entrepreneurial. A government that buries the next generation under an avalanche of debt cannot claim the moral high ground in the world. Acute economic hardship was exploited to enact unprecedented expansions of government power. both political parties have squandered the public’s trust. Government at all levels is mired in debt. It disavows the relentless government spending. and irresponsible leadership. policymakers in Washington have traveled the path of least resistance – a path that has. 2011 9 . Congress can no longer afford to ignore these demands. and moral imperatives by confronting the nation’s most urgent fiscal challenges. A government that allows economic destinies to be determined by political considerations rather than merit cannot lead the world in productivity and growth. They reject empty promises from a government that cannot live within its means. This Path to Prosperity draws upon solutions from across the political spectrum and builds upon the important work of the President’s bipartisan Commission on Fiscal Responsibility and Reform. toward a debt-fueled economic crisis and the demise of America’s exceptional promise. The American people ended a unified Republican majority in 2006. Political parties lose elections. economic. right at this moment. INTRODUCTION Americans face a monumental choice about the future of their country. and entrepreneurs. perverse incentives. and hard-working citizens. In recent years. Citizens stood up and demanded that their leaders reacquaint themselves with America’s founding ideals of liberty. just as they ended a unified Democratic majority last fall. unsurprisingly. Mismanagement and overspending have left the nation on the brink of bankruptcy. Only recently. limited government. millions of American families saw their dreams destroyed in a financial disaster caused by misguided policies. They deserve – and demand – honest leaders willing to stand for solutions. The Path to Prosperity. investors. heeds America’s political. and equality under the rule of law. This budget. But a government that loses its sovereignty to its bondholders cannot long guarantee its people’s prosperity – or secure their freedom. and borrowing that are leading America. House Budget Committee | April 5. the last Congress took actions that further undermined them. keeping America’s promises to seniors. and unleashing the genius of America’s workers. self-reliant. They deserve the truth about the nation’s fiscal and economic challenges. taxing. At a time when the free-market foundations of the American economy were in desperate need of restoration and repair. Americans reject leaders who focus on the pursuit of power at the expense of principle. The President and his party’s leaders embarked on a stimulus spending spree that added hundreds of billions of dollars to the debt. led the nation downhill. It chooses instead a path to prosperity – by limiting government to its core constitutional roles. and life in the republic goes on. The empty promises made by Washington over the years have resulted in economic hardships today and increasing pessimism about tomorrow.

“We cannot escape history. and aims to restore the dynamism that has defined America over the generations. 2011 10 . and to preserve its promise for the next generation. and defined by limitless opportunity. In the words of Abraham Lincoln. and American citizens calling for honest leadership and real solutions. fulfilling the mission of health and retirement security for all Americans. America is a nation conceived in liberty. Above all.” Will this be remembered as the Congress that did nothing as the nation slouched toward a preventable debt crisis and irreversible decline? Or will it instead be remembered as the Congress that did the hard work of preventing that crisis – the one that chose the path to prosperity? Decline is antithetical to the American Idea. dedicated to equality. economists and experts who have testified before the House Budget Committee. offers reforms that promote initiative by rewarding effort. this Path to Prosperity calls for a government faithful to its limited but noble mission: securing every American’s right to pursue a destiny of his or her choosing.This Path to Prosperity reflects input from leaders at the state and local level. We of this Congress and this Administration will be remembered in spite of ourselves. This budget rejects a culture of complacency. This budget’s goal is to keep it exceptional. House Budget Committee | April 5. In all the chapters of human history. This Path to Prosperity applies America’s timeless principles to today’s greatest challenges by committing to three key goals: lifting the crushing burden of debt. and strengthening the foundations of economic growth and job creation. there has never been anything quite like America.

While American families have been tightening their belts. The Government Accountability Office (GAO) – the non- House Budget Committee | April 5. The category in Figure 1 labeled “non-defense discretionary spending” is primarily devoted to funding other government agencies. received a 36 percent budget increase in just two short years. and funding for most government agencies. education. energy. but it is important to put that number into perspective. 2011 11 . there has been a 24 percent increase in this slice of the pie – a number that jumps to 84 percent when stimulus funds are included. defense spending should be executed with greater efficiency and accountability. Of the many new laws that made up the recent spending spree. with considerable focus on the billions of dollars it wasted on dubious government projects as well as the many promises it broke with respect to job creation and economic growth. That understanding begins with the elements of the federal budget: Annually Approved Spending Discretionary spending – FIGURE 1 funding debated and approved annually by Congress and the President – accounted for slightly less than 40 percent of all federal spending in 2010. But domestic government agencies also received large increases in their base budgets – the Environmental Protection Agency (EPA). This category includes transportation. Like all categories of government spending. An inevitable consequence of the last Congress’s decision to ramp up spending so quickly was that billions of Americans’ hard-earned tax dollars were squandered. these agencies have been the beneficiaries of a major spending spree over the last two years. the 2009 stimulus law has gotten the most attention. Defense spending as a share of the budget has fallen from around 25 percent thirty years ago to around 20 percent today. Understanding how the government spends the money it takes in by taxing and borrowing is the first step toward the goal of reversing the tide of red ink and getting the economy growing again. Over half of this category goes toward national defense. COMPONENTS OF THE FEDERAL BUDGET Before laying out a vision for the future of the country – for that is what a federal budget is – it is first necessary to provide an honest assessment of the facts. for example. But responsible budgeting must never lose sight of the fact that the first responsibility of the federal government is to provide for the defense of the nation. Since January of 2009. foreign aid.

these programs were created with a 20th-century economy in mind. Autopilot Spending Programs that have “autopilot” spending authority under existing law make up the rest of the budget.” The three largest entitlement programs are Social Security.partisan agency that audits the government’s books – recently found between $100 billion to $200 billion in duplication. In 1970. for 1Government Accountability Office. There are three key forces driving Social Security. Demographics The first is demographic. the House of Representatives voted to return spending on domestic government agencies to their pre-stimulus levels. Medicare and Medicaid into bankruptcy. In 1935 when Social Security was enacted. and Enhance Revenue. and the House continues to push the Senate and the President to bring spending under control for the remainder of the current fiscal year. Congress does not regularly debate. and farm subsidies – programs that are frequently referred to as “entitlement programs. overlap. seniors have been able to rely on Social Security and Medicare for their basic retirement needs. All three are interrelated. while providing a safety net for those citizens who meet with misfortune along the way? For decades. which means that current workers’ Social Security taxes are used to pay benefits for current retirees. http://www. there were about 42 working-age Americans for each retiree. But Americans will not be able to rely on these programs for much longer unless Congress repairs and reforms them. Congress must restore discipline to this category. Unlike defense. Medicare. Save Tax Dollars. Congress created these programs in the middle decades of the last century in response to a problem that has preoccupied American lawmakers for over a century: How can government best preserve the freedom to risk and to dare. Social Security. annually appropriate or properly scrutinize this category of spending. the share of the budget that goes to these entitlement programs is growing rapidly. The real drivers of the nation’s debt lie elsewhere. and waste in federal spending. and Medicaid. 2011 12 . If an individual meets legal eligibility requirements for these government programs. autopilot spending accounted for around 60 percent of all federal spending in 2010. March 2011. They were not designed for the new demographic and economic challenges of the 21st century. in pursuit of dreams large and small. The average life expectancy for men in America was 60 years. even though some of them affect one program more than the others. he or she automatically receives – or “is legally entitled” – to the benefit. Medicare and Medicaid all face structural problems that are driving them – and the country – into bankruptcy. The Path to Prosperity builds on these efforts to cut spending. ensuring government can efficiently and effectively meet its proper responsibilities. they will continue to crowd out all other national priorities until they break the federal budget.gao. Social Security is financed through a pay-as-you-go system. unemployment Already this year. it is usually referred to as “mandatory spending.items/d11318sp.” even though Congress can change the law at any time. But getting discretionary spending under control is only a first step toward fiscal sustainability. Unless action is taken to reform these programs.1 Clearly. This category includes food stamps. Opportunities to Reduce Potential Duplication in Government Programs. while Medicaid has sought to ensure that low-income Americans would not go without essential health care. these major entitlements consumed about 30 percent of the budget – a number that has grown to over 40 percent today (see Figure 1). This problem is most clearly seen in the financing for Social Security.pdf House Budget Committee | April 5. As illustrated in Figure 1. Simply put. Because permanent law governs the funding levels of programs in this category.

since the creation of the program. Economics The second force is economic.women it was 64. state or local government. With these FIGURE 2 demographics. each wage earner will be paying for nearly half of each retired person’s full benefits. Nearly 50 cents of every dollar spent on health care in this country is spent by federal. each worker. This is putting enormous pressure on Medicare and Medicaid. No economy can grow and thrive under that heavy a tax burden. The demographic situation has changed dramatically.Yet rapidly rising health-care costs remain as big a problem as ever. and the cost in both time and money of mistaken billings and misplaced House Budget Committee | April 5.5 percent of one retiree’s benefits. life expectancies have lengthened to an average of 75 years for men and 80 years for women. it was easy for the program to generate sufficient revenue to meet its promises to those over 65. there were 3. Not only is our nation aging. health-care costs rose by over 7 percent. thanks to innovations in medical technology and health care.8 years. Because of the design and structure of these programs. In 2009. when Social Security was first enacted in 1935. much of the government’s money gets wasted – and shows up as inflation in the cost of care. At the same time. there are over 50 million beneficiaries – an over fourteen-fold increase.5 million beneficiaries. Everyone who is on Medicare or knows someone on Medicare has stories about waste in the system – unnecessary tests. Real reform – especially with respect to Social Security – must reflect demographic reality. however. was contributing less than 2. 2011 13 . on average. By 2030. Washington has been embroiled in a bruising debate over a law that was supposed to provide a “comprehensive” solution to the nation’s health-care problems by putting even more of the health sector under government control. To put this in perspective. In 1950. it was 63. The explosion of payments in the 75 years since the Social Security system was enacted will be dwarfed by the demographic demands about to come. This represents a massive shift of earnings away from younger families trying to build their futures. But these programs aren’t just affected by rapidly rising health-care costs – they are actually a key driver of inflation in the health-care sector. there has also been a demographic shift to a lower retirement age. redundant treatments. In 1945. compared to around 1 percent for all other goods and services. Currently.6 years. For much of the last two years. the average age of retirement was 69. and are expected to grow further. The first members of the baby-boom generation – those born between 1946 and 1964 – are already eligible for early retirement. toward Social Security recipients. In 2010.

boils down to a question of control. and it pushes quality health care out of reach for those who are not eligible for federal programs. This leads to waste and fraud on a massive scale. At the same time. Its so-called cost controls amount to the same kind of fee-for-service reductions that have failed to control costs in Medicare for decades. as has happened in many states. Blank- check commitments create perverse incentives for everyone in the health-care system to maximize his or her share of this apparently limitless government subsidy. In this country. Empty promises Policymakers have known about these problems for decades. This results in more demands to increase federal subsidies and control. Any effort to propose significant reforms to these programs triggers a barrage of demagoguery and entrenched resistance. states are not given the flexibility to design their Medicaid programs in smart or efficient ways. and it’s a big reason that costs have spiraled out of control. And it will dramatically expand a Medicaid program that is already breaking state budgets and adding to a growing flood of red ink at the federal level. As government increases subsidies and control over the price and delivery of health care. Worse. At that point. these patients are left with fewer options and lower- quality care. it saps the system of innovation and efficiency. states do not pay the full cost of expanding the program. This kind of waste is inevitable in a top-down. blank-check commitments to reimburse health-care providers for services – and this very structure raises costs and reduces efficiency. When even their smaller share of the tab becomes unaffordable. Already. America’s health-care entitlements are currently set up as open-ended. or decentralized across the country at the state. Moreover. tax hikes and subsidies – exacerbates this flawed model and will push costs further in the wrong direction. Skewed political incentives The third force. health insurance companies have announced big premium hikes related to the law’s new mandates. Last year’s health-care law – with its maze of mandates. Because the federal government matches every state dollar spent on the program. Making do without any federal government departments. local and individual level? The current incentive structure. Real reform – especially with respect to Medicare – must eliminate this unsustainable waste and reduce inefficiencies and costs by giving beneficiaries themselves more control over their own health-care benefits and decisions. As a result. is not really House Budget Committee | April 5. government-run system. These incentives encourage states to expand the program beyond those who are truly in need. but few have been willing to propose real solutions. (Providers predictably increase the number of services provided for each condition as the government lowers fees). every dollar in Medicaid expenditures cut from state budgets triggers more than a dollar worth of cuts in federal funding. with most of the power concentrated at the federal level. Medicare and Medicaid will soon grow to consume every dollar of revenue that the government raises in taxes. controls. dictates. which leave many doctors unwilling to see Medicaid patients. including the military. Real reform – especially with respect to Medicaid – must give states the flexibility they need to better assist their most vulnerable populations. absent action. policymakers would be left with no good options. particularly with regard to Medicaid. will funnel more people into a broken system. Social Security.records. 2011 14 . with its large expansions of Medicaid. drives the heedless expansion of these programs and therefore the growth of health-care costs for all Americans. it is often the case that their only option is to impose across-the-board reductions in reimbursements to doctors. Skewed political incentives have proved especially damaging in the Medicaid program. where should power reside? Should it be centralized in the hands of federal bureaucrats. Figure 3 makes it very clear that. The new health care law.

FIGURE 3 option at all. America has seen unfunded obligations much. responsible steps to update their unworkable.S. government gets closer to breaking promises to current retirees while adding to a growing pile of empty promises made to future generations. Of course. 20th-century benefit structures. it will lose even the ability to make such choices on its own terms. Each year that Congress fails to act. Americans can expect the same thing to happen to Social Security and Medicare. Many retirees lost the critical health and retirement benefits that they were counting on. In industries such as steel. 2011 15 . and neither is raising taxes to a level that no free and prospering economy could sustain. aviation and autos. Social Security benefits are scheduled to be cut by 22 percent in 2037. Future benefit cuts – against a backdrop of skyrocketing House Budget Committee | April 5. much less severe than these take down some of its proudest companies. steep cuts in entitlement benefits to current seniors. FIGURE 4 Unless Congress acts. The foreign governments and institutional lenders that finance America’s debt would cut up the nation’s credit cards before things got that far. Medicare is on a similarly unsustainable path – the Medicare trend line illustrated in Figure 3 is a mathematical impossibility. That would mean sudden. and a crushing tax burden on young families. the U. The government’s unfunded liabilities – promises the government makes to current workers about their health and retirement security for which it has no means to pay – are growing by trillions of dollars a year. workers lost promised benefits when their employers failed to take timely. when the Social Security trust fund runs out of assets and payroll taxes are not sufficient to cover benefits owed. less help for the poor. Under current law. if Congress continues to delay.

and supports robust economic growth and job creation. strengthens its health and retirement safety net. to say nothing of the pain felt by FIGURE 5 American families deprived of the chance to save for a better future. Ryan. even though there is broad agreement that the structure of the tax code should be simplified and made more conducive to economic growth. If Congress wants to avoid defaulting on federal health and retirement programs. This level has generally been compatible with prosperity. it must adopt a program of gradual adjustment – one that frees the nation from the shadow of debt. and they deserve a federal health and retirement safety net that they can count on.pdf House Budget Committee | April 5. The government is running deficits because it spends too much.000 each year on average from every taxpayer in the top two brackets.fiscalcommission. Americans have had enough instability in their lives. May 2008. government revenue has averaged between 18 percent and 19 percent of economy. The trend is clear: Chasing ever-higher spending with ever-higher tax rates would leave the U.S. Nor can the government solve this problem just by raising the top individual tax rates: Even if it were wise to raise taxes on the most successful small businesses in America – most of which are owned by individuals and file at individual rates – the government cannot even come close to closing the fiscal gap that way. government is not running sustained deficits because Americans are taxed too 2011 16 . Taxes The U. http:// www. December 2010. high wages and entrepreneurship. 3 The National Commission on Fiscal Responsibility and Reform.3 2 Congressional Budget Office. economy at a severe disadvantage compared to the rest of the world. on top of what these taxpayers already pay. The non-partisan Congressional Budget Office has concluded that the tax rates needed to sustain the nation’s current fiscal trajectory into the future would end up sinking the economy.2 That is one reason that the Commission on Fiscal Responsibility and Reform proposed.S. Over the past 40 years. protects those in or near retirement from any disruptions in their benefits. The President’s budget would drive both spending and revenues to historic highs as a share of the total U. Figure 5 shows that Washington has a spending problem. The Moment of Truth. Letter to Congressman Paul D. as part of an overall effort to fix the nation’s unsustainable deficits.S. while eliminating tax loopholes to broaden the tax base. To close the fiscal gap by raising the top rates.costs – are a certainty if the program goes unreformed. the government would have to collect an additional $500. a fundamental tax reform plan that actually lowered income tax rates to promote growth. not a revenue problem.

economy. The gross debt is scheduled to hit $14 trillion. and the economic growth spurred by such a reform is a precondition to fixing the nation’s fiscal mess. Congress must address this crisis now – before it is too late.A broader base with lower rates is central to a fair. bringing it to $26 trillion. This year is projected to mark the third straight year in which the nation borrows over $1 trillion. which is nearly the size of the entire U. The deficit is how much the nation has to borrow to fund the gap between spending and revenue in a given year. The President’s budget would nearly double this debt over the next ten years. it has to borrow money to cover the shortfall. Deficits and Debt When the government spends more than it takes in through taxes. The debt is the total amount outstanding that the government owes – it represents the accumulation of deficits over time. Clearly. 2011 17 . House Budget Committee | April 5.S. efficient and sustainable tax code.

in order to avoid this fate. and others are advising their clients to do the same. Congress has all the fiscal powers necessary to command a change of course. But it must find the will to change. nearly every fiscal expert and advisor in Washington has warned that a major debt crisis is inevitable if the U. By contrast. Over the past few years.S. March 9. economy and ultimately capsize it if left on its present course.S.S.Yet decline is not inevitable. House Budget Committee | April 41990901/ (accessed March 31. This budget is offered in the hope that it might demonstrate the new House majority’s determination to face the government’s most difficult fiscal challenges. 2011). Some have even decided to purge their portfolios of U. It is the future of a nation in decline – its best days come and gone. and find it quickly. The lenders who buy much of the federal government’s debt have noticed the disconnect between the government’s perilous fiscal situation and the low rates of interest it is paying on the bonds that constitute the government’s loans. This is not the future of a proud and prosperous nation. The government’s failure to prevent this completely preventable crisis would rank among history’s most infamous episodes of political malpractice. and when they cut up the credit cards of profligate countries.cnbc. debt. 4 “Pimco’s Biggest Fund Dumps Treasury Bond Holdings. 2011 http://www. Americans have seen just how quickly a severe financial crisis can create widespread pain and chaos.” Reuters with CNBC. But the last crisis was foreseen only by a small number of perceptive individuals who recognized the implications of unwise decisions being made in Washington and on Wall Street. BURDEN OF DEBT The United States is facing a FIGURE 6 crushing burden of debt – a debt that will soon surpass the size of the entire U. severe economic turmoil ensues.4 Through its interventions into the economy. the Federal Reserve has recently become the largest buyer of government debt in the country. government remains on its current unsustainable path. and these purchases have helped keep interest rates low. An Unsustainable Path The recent sovereign debt crises in Greece and other highly-indebted European countries provide a cautionary tale of the rough justice of the marketplace – lenders cannot and will not finance unsustainable deficits forever. But the Fed is scheduled to stop making these purchases this Congress must show the market that it has a credible plan for getting the national debt under control. 2011 18 . in order to ease concerns over the government’s credit- worthiness and stave off an interest-rate spike. America’s unsustainable budget path is no longer a problem that is far off in the future.

5 Wolf. threaten to turn these recent deficit spikes into a permanent plunge into debt. University of Maryland economist Carmen Reinhart testified before the Budget Committee that 90 percent is often a trigger point for economic decline. March 10. Interest rates – and the burden of paying interest on the debt – have nowhere to go but up. from nearly 70 percent this year to over 87 percent of the U. debt held by the public – money that the U.S. government owes to others – will reach nearly 70 percent of the entire U. a sharp increase from a generation ago when foreigners owned just 5 percent of U. If foreign investors. November 29.S.” 5 Nearing a Debt Crisis Like a household or business.S.Erskine Bowles. it would not be so alarming.S. Hearing.S. said it best: “The era of deficit denial is over.6 How a Debt Crisis Would Unfold Spiraling interest rates The first sign that a debt crisis has arrived is that bond investors lose confidence in a government’s ability to pay its debts – and by that point. 2010 http://www. the U.S.S. the spending spree of the last two years. Committee on the Testimony before the U. But the nation’s reliance on foreign creditors has increased dramatically over the past few decades. debt. the Democratic co-chairman of the Commission on Fiscal Responsibility and Reform. 2011). Carmen M. a nation’s indebtedness is best understood in terms of how much it owes relative to how much it makes.S.htm (accessed March 31. That means that one in five tax dollars will be dedicated to making interest payments by the end of the decade – and that’s according to optimistic projections about interest rates.S. Interest payments are already consuming around 10 cents of every tax dollar. 6Reinhart. it is usually too late to avoid severe disruption and economic pain. but also because the bonds of most foreign countries are looking even printedition/news/20101129/1adeficit29_cv. “Are We Ready to Cut the U. economy by 2021. House Budget Committee | April 5. House. particularly during a time of crisis. Debt in excess of 60 percent of the economy is not sustainable for an extended period of time.S.S. By that measure. Foreigners now own roughly half of all publicly held U. That is bad news for the United States. economy this year. Lifting the Crushing Burden of Debt. Right now. According to the non-partisan CBO.usatoday. 2011. debt. However. especially foreign governments such as China. government’s ability to solve its most difficult fiscal challenges. partly because of the Fed’s interventions in the market. they will demand higher compensation to offset the perceived risk of holding U. the President’s budget would keep the debt climbing as a share of the economy in the decade ahead. government owed most of this money to domestic lenders. combined with the coming retirement of nearly 80 million baby boomers. If this were merely a temporary rise in the debt. This makes the nation vulnerable to a sudden shift in foreign investor sentiment. begin to lose confidence in the U. debt – meaning sharply higher interest rates. 2011 19 . Deficit?” USA TODAY. government is able to borrow at historically low rates. Foreign flight It would be one thing if the U. But as interest rates rise from their current historically low levels and debt continues to mount. Neither of these conditions is going to last. Richard. interest payments are projected to consume over 20 percent of all tax revenue by 2020. If interest rates increase by a higher-than- expected amount in future – which appears to be more likely – then the nation’s interest payments could cost trillions of dollars more.

sudden and disruptive cuts to vital programs. Essentially. 7 Reinhart. The study found that not only is average economic growth dramatically lower when gross U.economics. credit cards and car loans. Much higher interest rates on government debt would translate into much higher interest rates on mortgages. This would create a huge hole in the economy that would be exacerbated by panic. or all three. For starters. foreigners flocked to Treasury debt simply because other investments looked so unsafe by comparison.” January 2010. Absent a bailout. who have grown accustomed to borrowing in a climate of historically-low interest rates. 2011 20 .pdf House Budget Committee | April 5. The Consequences of Inaction Stagflation The economic effects of a debt crisis on the United States would be far worse than what the nation experienced during the financial crisis of 2008. Even if high debt did not cause a crisis. But these investment flows work both ways. and this helped keep interest rates low. If the Congress continues to put off difficult choices regarding the nation’s long-term problems. but inflation also becomes a problem. however. the only solutions to a debt crisis would be truly painful: massive tax increases. These higher rates would most likely come as a shock to most Americans.S. foreign investors will re-evaluate the creditworthiness of the United States and demand higher interest rates. debt exceeds 90 percent of the economy.FIGURE 7 During the financial crisis. Carmen M. the study confirmed that massive debts of the kind the nation is on track to accumulate are associated with “stagflation” – a toxic mix of economic stagnation and rising inflation. as the heavily indebted nations of Europe have recently learned. Rogoff. Real pain for families Warning signs in financial markets would merely be a harbinger of the real economic pain that would eventually be felt by American families in the event of a debt crisis. The study found conclusive empirical evidence that total debt exceeding 90 percent of the economy has a significant negative effect on economic growth. “Growth in a Time of Debt. runaway inflation. A recent study completed by Reinhart and economist Ken Rogoff of Harvard confirms this common-sense conclusion. no entity on the planet is large enough to bail out the files/faculty/51_Growth_in_Time_Debt. government. focusing on growth and inflation relative to past periods when this nation has experienced high debt levels. and Kenneth S.harvard.7 The study looked specifically at the United States.S. http://www. the nation would still be in for a long and grinding period of economic decline if it stays on its current path. It might even shock those who lived through the double-digit interest rates of the early 1980s.

etc.S. Facing the inability to borrow at a reasonable rate in the market. and tax rates would be raised across-the-board. Businesses would be doubly squeezed because. and the global economy. or roughly 120 percent of their total disposable income. If the nation ultimately experiences a panicked run on its debt. The nation’s households still owe $13 trillion in private debt. government were forced to address such a situation by cutting domestic spending and raising taxes to close the budget gap. 2011 21 . dollar is the world’s reserve currency. House Budget Committee | April 5. as their funding costs were rising. considered to be safe and highly liquid assets by virtually all financial institutions worldwide. it would be compelled to do so indiscriminately. while the rest is in credit cards and other forms of debt. The rise in interest rates would lead to lower business investment as companies would face a much higher hurdle for profitability on potential expansion plans.000 per year.S. would soon lead to a destabilizing inflation. household debt. home furnishings. hitting seniors the hardest.S. this would mean punishing seniors twice. In such a crisis. If the U. economy.S.S. without regard for the economic consequences. the Fed may also face rising pressure to step in and “monetize” the government’s debt – essentially printing money to buy up the public debt that private investors refuse to finance. Treasury bonds are the lynchpin of global debt markets. estimates suggest that an interest rate increase of just 1 percentage point would lead to over $400 in extra interest payments each year for the average family. causing a deterioration of the balance sheets of large financial institutions. the added interest costs for the typical family could easily exceed $1. it becomes harder for the government to raise revenue through taxes. Harsh austerity As economic growth deteriorates. and a vicious cycle ensues.S. the government would have to slash spending and raise taxes to narrow its large fiscal gap. Promises to current retirees would be broken. would decline. This would wipe out the savings of millions of Americans. meanwhile. U. Monetizing the debt. A U. Given that a serious debt crisis could lead to a sharp increase in Treasury rates. When combined with benefit cuts. As household borrowing costs spiked. A large chunk of that total debt consists of home mortgages.S. According to the current level and composition of U. and U. Real pain for businesses Higher borrowing costs would also serve as a serious impediment for businesses. Financial system breakdown The U. growth in overall consumer spending. demand for their products (particularly consumer durables bought on credit like cars. It turns out that roughly half of all that debt is in the form of variable interest rate loans. which accounts for nearly 70 percent of the U.Despite the increase in saving rates that has occurred in the wake of the financial crisis. Add in higher taxes from a cash-strapped government trying to appease its creditors. meaning that a sudden increase in Treasury bond rates would lead to higher borrowing costs for consumers relatively quickly.) would be slipping as consumer spending tailed off. it will be forced to make immediate and painful fiscal adjustments (like the austerity program that has provoked riots in Greece). The consequences of these actions would be disastrous for the U. households are still heavily indebted. The resulting panic would be orders of magnitude more disruptive than the financial crisis in 2008. and the inevitable result would be less business expansion and higher unemployment.S. debt crisis would lead to sharp declines in the dollar and in the price of these bonds.

” Foreign Affairs.The Path to Decline In the end. financial historian Niall Ferguson surveyed some of the great empire declines throughout history and observed that “most imperial falls are associated with fiscal crises. or it can begin – today – the work of restoring the vitality and greatness of America. Congress can choose to let this nation go the way of fallen empires. keep taxes low. All the… cases were marked by sharp imbalances between revenues and expenditures. Niall. In just 16 years. Congress must act now to change the nation’s fiscal course. For this and many other reasons. 2011 22 . The new House majority was sent here by the American people to get spending under control. If the nation stays on its current path. Other nations with very different interests will rush in to fill that role. March/ April 2010. “Complexity and Collapse: Empires on the Edge of Chaos. interest payments on the national debt will begin to exceed yearly defense spending just 11 years from now. yearly interest expenses will be double national defense spending. but also about America’s status as a world power and its freedom to act in its own best interests. If it stays on its current fiscal path. Last year in Foreign Affairs magazine. House Budget Committee | April 5. the debate about rising U.S. 8Ferguson. Alarm bells should be ringing loudly… [for] the United States. the United States will be unable to afford its role as an economic and military superpower. debt is not just about dollars and cents. and confront these great challenges today to allow this generation to pass an even greater nation along to the next generation. as well as difficulties with financing public debt.” 8 America must not lose its role in the world.

S. addressing not only what Washington spends. This budget offers America a model of government guided by the timeless principles of the American Idea: free market democracy. House Budget Committee | April 5. This budget offers a set of fundamental reforms to put the nation back on the right track. This budget locks in savings with enforceable spending caps and budget process reforms. Ending corporate welfare: There is a growing and pernicious trend of government overreach into sectors of the private economy – a trend that stacks the deck in favor of entrenched interests and stifles growth. with much of the money going to programs and projects the nation can do without. and the current administration has offered no serious plan to address the sea of red ink. it reflects the $178 billion in savings identified by Defense Secretary Robert Gates. too fast over the past decade. responsible energy exploration in the United States. It reduces the bureaucracy’s reach by applying private-sector realities to the federal government’s civilian workforce. Streamlining other government agencies: Government spending on domestic departments and agencies has grown too much. Providing for the common defense: Recognizing that the first job of government is to secure the safety and liberty of its citizens from threats at home and abroad. Reform government to make it more efficient. but also how tax dollars are spent. $100 billion of which would be reinvested in higher combat priorities. the federal government has strayed from these timeless principles. create jobs. while fostering an environment for economic growth and private sector job creation. And it repeals the government takeover of health care enacted last year and moves toward patient-centered reform. liberty and the pursuit of happiness. 2011 23 . It reflects an extension of the moratorium on earmarks. open competition. it usually doesn’t do any of them very well. a secure safety net. When government takes on too many tasks. a robust private sector bound by rules of honesty and fairness. effective and responsible The role of the federal government is both vital and limited. 1. Boosting American energy resources: Too great a percentage of America’s vast natural resources remain locked behind bureaucratic barriers and red tape. It targets hundreds of government programs that have outlived their usefulness. The last Congress added trillions to the problem. and equal opportunity for all under a limited constitutional government of popular consent. There is a vacuum of leadership in Washington. Instead. This budget starts to restore spending discipline to a government that badly needs it by returning non-security discretionary spending to well below 2008 levels. this budget rejects proposals to make deep. ends Washington policies that drive up gas prices. across-the-board cuts in funding for national defense. American men and women in uniform are presently engaged with a fierce enemy and dealing with emerging threats around the world. This budget recommits the federal government to the security of every American citizen’s natural right to life. This budget attempts to lead where others have fallen short. Changing Washington’s culture of spending: The budget process in Washington contains numerous structural flaws that bias the federal government toward ever-higher levels of spending. In certain key respects. This budget ends the taxpayer bailouts of failed financial institutions and stops Washington from picking the winners and losers across sectors of the economy. GOVERNMENT When it comes to this generation’s defining challenge – the explosive growth of the national debt – the simple truth is that Washington has not been honest with the American people. This budget removes moratoriums on safe. This budget achieves savings in the category of national defense without jeopardizing preparedness or critical missions. A REFORM AGENDA FOR THE U. Limited government also means effective government. To do otherwise would consign the United States to a diminished future – a future that disrespects the sacrifices that generations of American families have made to secure the promise of this exceptional nation. and reduce dependence on foreign oil. and unlocks American energy production to help lower costs.

This budget embraces the widely acknowledged principles of pro-growth tax reform by proposing to consolidate tax brackets and lowers tax rates. This budget consolidates a complex maze of dozens of job-training programs into more accessible.2. 2011 24 . yet the tax itself raises relatively little revenue. In addition. offering instead real security through real reforms. Repairing a broken Medicaid system: Medicaid’s flawed financing structure has created rapidly rising costs that are nearly impossible to check. and for future generations. with high marginal rates that discourage growth. Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks. Reform government programs to fulfill the mission of health and retirement security This budget puts an end to empty promises from a broke government. enjoying the same kind of choices in their plans that members of Congress enjoy today. Targeting assistance to those in need: The welfare reformers of the 1990s were not able to extend their work beyond cash welfare to other means-tested programs. Reform the tax code to promote economic growth and job creation This budget recognizes that the nation’s fiscal health requires a vibrant. with a top rate of 25 percent. one-size-fits-all approach by converting the federal share of Medicaid spending into a block grant that gives states the flexibility to tailor their Medicaid programs to the needs of their unique populations. Advancing Social Security solutions: The risk to Social Security. Preparing the workforce for a 21st century economy: The government’s dozens of job-training programs suffer from overlapping responsibilities and too often lack accountability. Reform welfare to strengthen the social safety net This budget builds upon the historic progress of bipartisan welfare reform in the late 1990s. It strengthens Medicaid. threatening to bankrupt the system – and ultimately the nation. who will receive the benefits they’ve organized their retirements around. driven by demographic changes. These changes will not affect those in and near retirement in any way. This budget extends those successes to other areas of the safety net to ensure that America’s safety net does not become a hammock that lulls able-bodied citizens into lives of complacency and dependency. The perverse incentives created by the corporate income tax do a lot of damage. Reform that empowers individuals — with a strengthened safety net for the poor and the sick — will guarantee that Medicare can fulfill the promise of health security for America’s seniors. Saving Medicare: A flaw in Medicare’s structure is driving up health care costs. growing private sector. This budget saves Medicare by fixing this flawed structure so that the program will be there for future generations. When younger workers become eligible for Medicare. in turn. The government must do a much better job of leveraging and targeting existing resources in this policy area. which are. The framework established in this budget secures health and retirement benefit programs both for current beneficiaries. invest. This budget improves incentives for job creators to work. 4. 3. accountable career scholarships aimed at empowering American workers with the resources they need to pursue their dreams. food stamps and job training programs by providing states with greater flexibility to help recipients build self-sufficient futures for themselves and their families. Corporate tax reform: American businesses labor under the highest corporate income tax in the developed world. and innovate in the United States by lowering the corporate rate from 35 percent to a much more competitive 25 percent. This budget ends an onerous. is nearer at hand than most acknowledge. they will be able to choose from a list of guaranteed coverage options. clearing out the burdensome tangle of loopholes that distort economic activity. who will inherit stronger programs they can count on when they retire. Medicare would then provide a payment to subsidize the cost of the plan. This budget heads off a crisis by forcing action from the President and both chambers of Congress to ensure the solvency of this critical program – creating the space for bipartisan solutions. House Budget Committee | April 5. It charts a prosperous path forward by reforming a tax code that is overly complex and unfair. Individual tax reform: The current code for individuals is too complicated.

our nation has been marked by hardship.The Choice Throughout history. in the Senate and in the White House – now must take up the tools and start building the future Americans deserve. transform its government. President Franklin Roosevelt – in words later repeated by President Ronald Reagan – warned of the threat to America’s national character from permanent dependency on government: The lessons of history. Restoring limits to the size and scope of government is not a partisan issue. and weaken its national identity in ways that may not be reversible. and lenders that the new House majority recognizes the threat that unlimited government poses to the American way of life. investors. gradual moral-political decline as dependency and passivity weaken the nation’s character and as the power to make decisions is stripped from individuals and their elected representatives and given to non-elected bureaucracies. This budget provides a plan for assuring that this generation upholds America’s historic legacy. Americans truly face a monumental choice – a choice that can no longer be avoided. and charts a new path to prosperity. a subtle destroyer of the human spirit… It is in violation of the traditions of America. From the beginning. savers. a budget is merely a blueprint for the actual work of statecraft. Americans have selflessly tackled the difficult challenges before the republic. show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. The Path to Prosperity is the groundwork for a serious conversation about the future of this exceptional nation. 2011 25 . yet defined by great courage and achievement in monumental efforts. 1935. In this we face two dangers: long-term economic decline as the number of makers diminishes and the number of takers grows and. whether civil war. or military threats from abroad.To dole out relief in this way is to administer a narcotic. confirmed by the evidence immediately before me. economic depression. Today. Each generation has been tested. rediscovers her abiding principles. the nation’s crushing burden of debt jeopardizes this legacy. and that it is determined to fulfill its commitments and responsibly restrain government’s growth. The elected representatives of the American people – in the House of Representatives. In his State of the Union Address on January 4. more prosperous and free America. our present and our future. The Path to Prosperity charts a different course. and each generation has found strength in America’s highest principles and called forth its deepest virtues to make certain that the next generation inherited a stronger. worse. assuring this nation’s workers. House Budget Committee | April 5. This generation’s defining moment has arrived. America is drawing perilously close to a tipping point that has the potential to curtail free enterprise. This generation must not be the first generation to fail – to break the link between our past. While an important statement of priorities. It marks a new federal commitment.

5 74.7 70.2 73.939 4.7 69.7 67.123 4.352 4.745 3.254 15.3 17.354 34.958 REVENUES 2.088 DEBT  HELD  BY  THE   10.094 3.217 12.618 3.1 22.9 19.388 -­‐995 -­‐699 -­‐492 -­‐434 -­‐481 -­‐408 -­‐379 -­‐414 -­‐402 -­‐385 -­‐5.0 1.2 18.4 2.8 16.351 11.998 4.377 3.8 1.4 17.529 3.5 71.559 3. S-­‐1 FY2012  CHAIRMAN'S  MARK (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-­‐2021 OUTLAYS 3.3 4.8 68.237 3.858 3.3 2.589 3.7 DEFICIT 9.801 13.5 71.8 1.800 15.870 DEFICIT -­‐1.9 17.363 14.886 14.9 20.6 17.9 2.8 17.2 72.0 18.9 19.586 3.681 16.6 2.5 21.5 2.9 1.326 13.5 REVENUES 14.8 72.544 4.9 17.7 19.2 20.2 6.7 20.418 12.7 DEBT  HELD  BY  THE   68. PUBLIC AS  A  SHARE  OF  GDP 10-­‐YEAR 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 AVERAGE OUTLAYS 24.a.8 74.230 2.9 18.533 2.860 3.142 4.0 19.071 n.671 3.1 17.6 PUBLIC .2 20.8 20.739 39.

110 -­‐3. S-­‐2 FY2012  CHAIRMAN'S  MARK  VS. PUBLIC .938 n.139 -­‐1.511 -­‐1.033 -­‐1.890 -­‐2.812 REVENUES 0 -­‐25 -­‐227 -­‐346 -­‐406 -­‐448 -­‐482 -­‐527 -­‐544 -­‐561 -­‐597 -­‐4.450 -­‐3.735 n.877 -­‐4.831 DEFICIT -­‐38 -­‐169 -­‐202 -­‐272 -­‐314 -­‐360 -­‐461 -­‐524 -­‐608 -­‐699 -­‐773 -­‐4.  CBO  BASELINE (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-­‐2021 OUTLAYS -­‐11 -­‐110 -­‐220 -­‐368 -­‐510 -­‐602 -­‐664 -­‐733 -­‐796 -­‐869 -­‐941 -­‐5.649 DEBT  HELD  BY  THE   -­‐11 -­‐98 -­‐94 -­‐118 -­‐229 -­‐396 -­‐601 -­‐840 -­‐1.a.162 DEFICIT -­‐11 -­‐86 7 -­‐21 -­‐104 -­‐154 -­‐182 -­‐206 -­‐251 -­‐308 -­‐344 -­‐1.016 -­‐6.382 DEBT  HELD  BY  THE   -­‐38 -­‐243 -­‐443 -­‐715 -­‐1.214 REVENUES 0 -­‐11 -­‐39 -­‐118 -­‐206 -­‐258 -­‐228 -­‐249 -­‐240 -­‐240 -­‐243 -­‐1.  PRESIDENT'S  BUDGET (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-­‐2021 OUTLAYS -­‐37 -­‐179 -­‐241 -­‐390 -­‐520 -­‐618 -­‐690 -­‐773 -­‐848 -­‐939 -­‐1. PUBLIC FY2012  CHAIRMAN'S  MARK  VS.a.406 -­‐1.

618 3.958 .998 4.667 MEDICARE 563 560 601 636 666 720 748 776 839 893 953 7.352 4.952 NET  INTEREST 212 256 318 387 448 507 558 600 634 666 687 5.739 39.671 3.124 1.392 PRESIDENT'S  HEALTH   0 0 0 0 0 0 0 0 0 0 0 0 CARE  LAW SOCIAL  SECURITY 727 760 799 841 888 939 995 1.559 3. S-­‐3 FY2012  CHAIRMAN'S  MARK  BY  MAJOR  CATEGORY (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021-­‐2022 SECURITY   711 683 679 686 697 714 725 736 757 772 788 7.544 4.529 3.863 OTHER  MANDATORY 489 410 373 309 270 279 264 242 267 268 269 2.060 TOTAL  OUTLAYS 3.123 4.586 3.058 1.236 GLOBAL  WAR  ON   76 118 93 65 54 51 50 50 50 50 50 630 TERROR NON-­‐SECURITY 565 482 435 416 404 396 395 396 402 410 422 4.194 1.159 MEDICAID 275 259 262 248 243 252 263 265 280 291 305 2.266 9.858 3.

016 -­‐6.  CBO  BASELINE  BY  MAJOR  CATEGORY (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021-­‐2022 SECURITY 4 28 25 27 27 26 24 21 17 12 8 214 GLOBAL  WAR  ON  TERROR 2 -­‐10 -­‐58 -­‐95 -­‐111 -­‐119 -­‐122 -­‐126 -­‐130 -­‐134 -­‐138 -­‐1.  PRESIDENT'S  FY2012  BUDGET  BY  MAJOR  CATEGORY (NOMINAL  DOLLARS  IN  BILLIONS) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021-­‐2022 SECURITY 0 0 0 0 0 0 0 0 0 0 0 0 GLOBAL  WAR  ON  TERROR 0 0 0 0 0 0 0 0 0 0 0 0 NON-­‐SECURITY -­‐14 -­‐72 -­‐79 -­‐78 -­‐83 -­‐90 -­‐95 -­‐102 -­‐105 -­‐113 -­‐106 -­‐923 MEDICAID 0 -­‐1 -­‐14 -­‐44 -­‐61 -­‐69 -­‐77 -­‐97 -­‐106 -­‐125 -­‐140 -­‐735 MEDICARE 0 -­‐12 -­‐22 -­‐25 -­‐28 -­‐32 -­‐38 -­‐44 -­‐54 -­‐63 -­‐71 -­‐389 PRESIDENT'S  HEALTH  CARE  LAW 0 -­‐6 -­‐9 -­‐66 -­‐122 -­‐164 -­‐182 -­‐194 -­‐208 -­‐219 -­‐233 -­‐1.214 .812 FY2012  CHAIRMAN'S  MARK  VS.810 NET  INTEREST -­‐2 -­‐4 -­‐10 -­‐22 -­‐41 -­‐64 -­‐93 -­‐125 -­‐161 -­‐200 -­‐244 -­‐965 TOTAL  OUTLAYS -­‐37 -­‐179 -­‐241 -­‐390 -­‐520 -­‐618 -­‐690 -­‐773 -­‐848 -­‐939 -­‐1.403 SOCIAL  SECURITY 0 0 0 0 0 0 0 0 0 0 0 0 OTHER  MANDATORY -­‐2 -­‐42 -­‐46 -­‐48 -­‐78 -­‐82 -­‐82 -­‐83 -­‐82 -­‐85 -­‐87 -­‐715 NET  INTEREST 0 -­‐1 -­‐4 -­‐7 -­‐15 -­‐27 -­‐42 -­‐58 -­‐76 -­‐97 -­‐119 -­‐446 TOTAL  OUTLAYS -­‐11 -­‐110 -­‐220 -­‐368 -­‐510 -­‐602 -­‐664 -­‐733 -­‐796 -­‐869 -­‐941 -­‐5.617 MEDICAID 0 -­‐1 -­‐13 -­‐45 -­‐63 -­‐73 -­‐82 -­‐102 -­‐112 -­‐131 -­‐150 -­‐771 MEDICARE 0 0 1 3 4 3 0 -­‐3 -­‐9 -­‐14 -­‐17 -­‐30 PRESIDENT'S  HEALTH  CARE  LAW 0 -­‐6 -­‐9 -­‐66 -­‐122 -­‐164 -­‐182 -­‐194 -­‐208 -­‐219 -­‐233 -­‐1. S-­‐4 FY2012  CHAIRMAN'S  MARK  VS.044 NON-­‐SECURITY -­‐15 -­‐79 -­‐117 -­‐136 -­‐152 -­‐166 -­‐177 -­‐188 -­‐196 -­‐202 -­‐204 -­‐1.403 SOCIAL  SECURITY -­‐14 0 0 0 1 1 1 2 2 2 2 11 OTHER  MANDATORY -­‐7 -­‐85 -­‐106 -­‐155 -­‐186 -­‐199 -­‐205 -­‐212 -­‐216 -­‐221 -­‐225 -­‐1.

S-­‐5 CHAIRMAN’S  MARK  VS  STATUS  QUO CBO  LONG-­‐TERM  ANALYSIS PROJECTED 2022 2030 2040 2050 CHAIRMAN'S  MARK TOTAL  REVENUES 18  ½ 19     19     19     TOTAL  SPENDING 20  ¼ 20  ¾ 18  ¾ 14  ¾ DEFICIT  (-­‐)  OR  SURPLUS -­‐2 -­‐1  ¾ ¼ 4  ¼ DEBT  HELD  BY  THE   70 64 48 10 PUBLIC ALTERNATIVE  FISCAL  SCENARIO TOTAL  REVENUES 19  ¼ 19  ¼ 19  ¼ 19  ¼ TOTAL  SPENDING 26  ¾ 32  ¼ 38  ½ 45  ¼ DEFICIT  (-­‐)  OR  SURPLUS -­‐7  ½ -­‐13     -­‐19  ¼ -­‐26     DEBT  HELD  BY  THE   95 146 233 344 PUBLIC .

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